THE RAID ON AOL: How Vox Pillaged Engadget And Founded An Empire

Back at the beginning of February, AOL’s marquee technology blog
was coming off its most trafficked month in site history. It had
survived the reorganization that gutted many of AOL’s other
verticals, including the similarly male-focused sports site
FanHouse. And it had served as the “official blog” of the 2011
CES trade show for the third year running.

Then there was the value. Sources tell us Engadget was generating
a revenue run rate of $10-15 million annually.

But by the end of the first week in April, editor-in-chief
Joshua Topolsky and eight other staffers,
including editors Paul Miller, Ross Miller, and Nilay Patel, had
left Engadget to start a new tech site. This site didn’t have a
name, yet. All they said was that it would be part of a new media
company alongside sports startup SB Nation, which ran a network of blogs that
each focused on a different sports franchise.

Which leads to three questions. One: why did some of the
best-known writers in the consumer tech field leave a media
behemoth like AOL, all at the same time? Two: why did they
join a startup focused on professional sports? And three: how
could AOL let them all go?

AOL Turns Its Back

Jim Bankoff started at AOL in the mid-1990s, right out of
business school, and worked there until 2006. Throughout his
tenure with the company, he focused on the digital content
business, which was initially a secondary concern for AOL: they
were an Internet service provider, with the bulk of their revenue
coming from subscriptions for dialup.

In 2002, Bankoff took over as the EVP for Programming and
Products at AOL. Working with a former lawyer and political
appointee named Marty Moe, he began trying to shift the company
over to a more ad-driven model. Acquiring Weblogs Inc., a company
that ran the sites Engadget, Joystiq, and dozens of others, was
one of their first moves in 2005 – Bankoff also started the
wildly successful celebrity news site TMZ, as well as FanHouse and other
verticals – and it enabled them to pursue a new content strategy
for AOL.

“Our model was to get great, web-native talent, give them
technology, focus on a vertical, make it social and real-time and
scale it up,” Bankoff told Business Insider.

Randy Falco — a veteran of the old-media
world at NBC — became CEO in 2006.

Bankoff says it was "clear" that the new bosses "weren’t
committed to this model."

"I’m not sure what they were committed to.”

Frustrated with the lack direction, Bankoff left AOL in 2007. He
consulted for a while – including a stint for the Huffington
Post.

Then he started advising a company called SB Nation in 2008.

So You Want To Write About Sports

SB Nation started with Athletics Nation, and
Athletics Nation started with Tyler Bleszinski. In 2003, sports
blogging was in its infancy. Bleszinski called the scene “mostly
random baseball sites on Typepad and Blogspot.”

Unhappy with how his favorite team, the Oakland A’s, was being
covered – and inspired by the cerebral
sabermetrics of A’s manager Billy Beane, as chronicled in Michael
Lewis’ book “Moneyball” – Bleszinski decided to start Athletics
Nation. He corrected what he saw as the mistakes of other
baseball writers by doing away with the veil of objectivity,
which he believes is a myth in sports media coverage. He proudly
displayed his pro-A’s bias and covered the team obsessively,
24/7, and particularly in the offseason.

Athletics Nation took off, becoming the second-biggest site on
advertising network Blogads behind political blog the Daily Kos. It so happened that
the Daily Kos’ editor, Markos Moulitsas, was also a good friend
of Bleszinski’s, and the two decided to join forces. They
co-founded SB
Nation in 2005, expanding Bleszinski’s baseball coverage
with another six part-time writers.

At the same time, they adapted the network onto the Daily Kos’
platform, which helped foster a sense of community across the SB
Nation blogs. That community took root in a fan-post function
that allowed fans to post articles straight to the site, as well
as an advanced commenting system. Bleszinski, who came from a
journalism background, also stressed that his writers treat their
subjects with a journalist’s professionalism, and all potential
SB Nation writers were plucked from the ranks of established
bloggers who had proven themselves as savvy sports minds.

In the few years after SB Nation came into existence, they
absorbed blogs for every team in the NBA, NHL, MLB, and NFL, as well as some major college programs and
other teams.

Sometime in 2008, Bleszinksi and SB Nation decided it was time to
raise money and expand the business.

The Blog Grows Up

Bankoff had already decided that he wanted to pursue the same
model he’d gone after at AOL except with a smaller, independent
company, and here was the perfect fit, a media network that,
thanks to the nature of sports, already had scale built in – the
ability to connect with consumers on both a topical and general
level.

He'd come in as an advisor and small angel for SB Nation in 2008.
At the end of 2008, Bankoff helped the company take its
first round of funding, led by venture capital firm Accel Partners, raising about $5 million. He
became the official CEO/Chairman in January 2009, and in
July SB Nation raised a Series B round, netting another $8
million with VC firm Comcast Ventures, among others.

The money was there – the next step was to figure out how to keep
expanding.

Refocusing around the firmed-up SB Nation brand, SB Nation.com
relaunched in September 2009 with a national focus to provide a
centerpoint for its continuously growing roster of blogs, and by
the end of 2010 the sports category had begun to break even.

Bankoff still hoped to build the media empire he once planned to
build for AOL. To do that, he needed talent. Lots of it.

He knew exactly which company with unhappy employees to draw on.

A Civil War In Tech Town

Joshua Topolsky started freelancing for Engadget in 2007. He’d
been touring as a DJ and producing music – he said one of his
records actually charted in the top 40 in England – and it didn’t
take long for the freelancing to turn into a full-time gig at
Engadget under then editor-in-chief Ryan Block. In 2007,
just a year after he signed on at Engadget, Topolsky took over
for Block as EIC.

During his time with the site, Topolsky started the Engadget Show
and created a mobile app, and Engadget’s traffic continued to
grow.

It was a time of strength for AOL's most popular and important
media property.

At some point during the acquisition process, Arrington got the
impression that Topolsky was trying to block it. Arrington has
since gone public with this accusation, and Topolsky has denied
it.

Within months, though, Arrington was firing shots at his fellow
AOL editor, calling
Topolsky’s site “a plasticized caricature of a real blog,”
“immensely unethical,” and saying he’s “sick of their bullshit,”
that “they’d been trolling him for years.” AOL brass did nothing,
and
Topolsky asked Arrington to explain himself, at which point
he went silent. (Business Insider emailed Arrington for comment
on this story, but he didn't respond.)

As 2011 began, AOL executives – now led by Falco's replacement,
former Googler Tim Armstrong – came up with a new plan
for the company's content business. They called it the AOL Way.

The plan leaked to Business
Insider before Engadget's leaders ever got a look at it.
When they finally saw it, the Engadget writers and editors were
disgusted.

One, Paul Miller, publicly complained, saying that
AOL “had proved an unwilling partner in the site’s
evolution” and “sees content as a commodity it can sell ads
against."

Topolsky told us that it was a feeling that had spread throughout
the staff of Engadget.

“There was a frustration that we were in a holding pattern at the
time,” Topolsky told us. “It was clear to me that there were
things I wanted to do and needed to do that I couldn’t do at
Engadget and AOL.”

As they began to consider the problems that they were dealing
with, the realization hit them that they were saddling themselves
with unnecessary burdens.

“We had been so independent and so cut off at AOL already,”
Topolsky said. “One of my editors said, ‘Why don’t we just leave,
why don’t we just go independent?"

Operation Engadget

As morale at Engadget deteriorated, Bankoff decided consumer
technology would be the first non-sports vertical for SB Nation
to enter.

“Consumer technology made sense for a lot of reasons,”
Bankoff said. “There are a lot of similarities between sports and
technology, starting with the fact that the advertisers have a
lot of overlap – it’s a majority male demographic. And it made
sense from the content perspective, with these same structured
data elements: in sports, you have stats, players, teams, and in
tech you have specs, gadgets, manufacturers and devices.”

Bankoff's reinvention of
his old AOL model depends on the help of close friend and Vox
exec Marty MoeImage courtesy Vox
Media

Also, Bankoff was still very close friends with Marty Moe – who
had just left AOL in 2010 – and Bankoff wasn't ignorant of
the discontent at Engadget. It was becoming clear to him that it
wouldn't be very hard to find a great staff for the new site.

Bankoff reached out to Topolsky – and a few other writers
at Engadget.

He offered them a completely independent property. He
offered them equity. He promised adaptable, robust technology
that was flexible in both display and
development.

Topolsky resigned his editorship at Engadget in March. Moe
came on as chief content officer in April. In total, twelve
Engadget employees helped start the new venture.

How could AOL let such an exodus from its most important
media property happen?

"Other areas [got] more attention," says Bankoff. "I think AOL’s
priorities were just elsewhere. And I don’t say that
disparagingly. They had a particular focus on women, which is a
huge market.”

Moe is harsher.

“I would say Weblogs, Inc. was the single most important
acquisition AOL made in the nine years that I was there, and I
would say that it was ultimately underleveraged and
underutilized. It gave [AOL] the opportunity to become, if you
will, the publisher of the future, but those efforts were
ultimately underinvested in. We didn’t feel like anyone had
really pulled community, technology, editorial, and design
together and had a big enough vision for what the tech category
could be.”

Since Topolsky and co. left, Engadget’s traffic has actually
risen according to both Fruhlinger and comScore,
hitting a new uniques high in October (though it appears
relatively flat over the last two years).

“I’m proud of the people at The Verge who – let’s be honest –
learned everything they know during their time at Engadget.
Clearly we have a formula that works,” Fruhlinger wrote in an
e-mail.

“What’s most striking – and what no one is mentioning – is that
they are following our script pretty closely. They told the world
they were looking to do something different. It’s flattering, but
I was hoping for something more unique.”

What once was Engadget has
become The Verge.Image courtesy Vox
Media

Fruhlinger denied that AOL has ever tried to intrude on how
Engadget conducted itself, whether owing to TechCrunch or the AOL Way or anything else. He
says the support of AOL media boss Arianna Huffington, who came to AOL
through its $300+ million acquisition of Huffington Post, allowed
him to rebuild the staff after the departures.

He also said the site has been on Blogsmith since its earliest
days and that the platform had been customized as much as the
staff needed, with new products being rolled out continuously. He
says that people who complain about the platform's flexibility
were mostly just reluctant to "get involved in corporate
procedures."

"Let’s be clear. Engadget (and AOL Tech) is a profitable,
successful business, and that’s because it’s run like a
business,” Fruhlinger said.

“The frustration came from people who lacked an understanding of
the business side of things, who imagined a gap between what they
were doing and what they were getting out of it. They may have
been right, but they certainly didn’t present a case before
dropping the mic and storming off the stage. The irony is that
they’re now in a high-pressure startup model that will require
some hefty learning curves before investors come knocking.”

Verging On An Empire

In November 2011, SB Nation – rebranded as Vox Media –
launched The
Verge with Topolsky as editor and Moe as publisher.

In The Verge’s first month, according to the company, the site
got 4 million uniques and 20 million pageviews. According to
information from Quantcast, Vox overall has doubled its uniques
in the last six months, up to about 15 million per month.

Two months into The Verge’s life, Topolsky said Vox technology –
particularly something the company calls a "story stream" – has
allowed him to create a magazine-like web product that
articulates content into larger narratives, beyond the typical
blog form of one story after another.

The "story stream," developed by Vox VP of Product and Technology
Trei Bundrett and his team, allows Vox sites to focus on and
follow a particular event as it unfolds, whether it’s, say, the
hunt for a new Penn State coach, or
SOPA at The Verge. Every time a story is published on that
topic, there are ways for the reader to be notified through
Facebook or a mobile device, and updates
are all collected into one place on their respective sites.

Vox continues to expand. It's moving into professional video,
with a new studio under construction. And the company has hired
Amy Nelson and Rob Neyer from another media megabrand, ESPN.

Bankoff says he still has a good relationship with his
old company, AOL. Vox recently acquired its MMAFighting.com
site.

But that doesn't mean his days of raiding AOL are over.
Earlier this month, Business Insider learned that Vox is set to
launch a new site dedicated to covering video games. The lead
editor: Chris
Grant from AOL's Joystiq.

It's a perfect example of Vox's strategy: find the best
web-native talent — Bankoff said Vox wouldn't be raiding the
New York Times newsroom any time soon — in a
particular field and give them the money and support they need to
get started. That's how Topolsky was able to hire 20 people right
off the bat to start The Verge, and it's partly how Moe looks for
new categories to expand into.